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News Article

DoD Adopts New Business Practices to Manage Supply Chain

By Samantha L. QuigleyAmerican Forces Press Service

WASHINGTON, Sept. 21, 2005  The Defense Department is adopting a more customer-focused approach to acquisitions, technology and logistics, the department's top AT&L official told a group of more than 300 industry leaders at the National Defense Industrial Association's September luncheon here today.

"The customers ... expect us to prepare and provide the capabilities they will need to defend America and her interests, not just today, but into the future," Kenneth J. Krieg told the group.

He identified AT&L's customers, or stakeholders, as the secretary of defense, Congress and the taxpayers, who "wisely invest their hard-earned money in their nation's common defense."

To serve all of these stakeholders well, Krieg said, AT&L must adhere to some basic principles, including making decision based on facts, aligning authority and responsibility, balancing the costs of various choices and building processes that have both agile performance and strong oversight.

"As we incorporate these basic principles into our daily routine, we also are mindful of how business in the Department of Defense is changing," he said. "And it is changing very dramatically. Our job is less about moving paperwork and more about moving knowledge. It is less about bending metal and more about integrating systems. It is about joint and integrated endeavors."

To meet the challenge, he said, AT&L is developing a new set of business practices affecting five broad areas: supply chain, medical readiness and performance, acquisition, ordinary and strategic process integration, and DoD corporate governments.

In the review of these areas, Krieg said, three overarching guidelines are being applied: being responsive to customers, ensuring decisions are made based on facts and at the appropriate level, and redirecting work efforts. All of these are geared toward achieving effectiveness and efficiency, he said.

For example, he noted, technology such as item-unique identification and radio frequency identification that allow the tracking of both products and procedures will help to attain those goals. "The key to future success lies in working smarter, not just harder," Krieg said.

He cited performance-based logistics, or PBL, as one way to give DoD's stakeholders the best value on the roughly $80 billion the department spends annually on supply-chain activity.

"PBL helps us to work more efficiently and gather data and facts we need to measure success and uncover roadblocks to achieving our goals," he said. "Even more importantly, we're able to factually report those successes to our stakeholders and work together to remove those roadblocks."

Also, Krieg said, he intends to introduce Lean Six Sigma techniques, a widely used business strategy, to further streamline AT&L's practices. Lean Six Sigma emphasizes speed and efficiency in improving business processes and transactions.

"I intend to use its principles to consider the effectiveness and efficiency of the administrative processes of acquisition documentation," he said, "allowing our staff to streamline their procedures and free their time to focus on other customer needs." He added that AT&L will seek to apply Lean Six Sigma techniques to its business activities.

"In an era where people are devoting more and more hours to their work," Krieg said, "it's not sensible to further increase the time ... we spend. Instead, we must increase the efficiency of our business products."